GLOSSARY
What is a Standard-Essential Patent?
Understanding SEPs—patents essential to technology standards, FRAND licensing obligations, and their strategic importance.
Definition
A standard-essential patent (SEP) is a patent that claims technology required to implement a technical standard (e.g., 5G, WiFi, HEVC). SEP owners typically must license these patents on FRAND terms.
How SEPs Work
- Standards bodies (3GPP, IEEE, ETSI) develop technical standards
- Companies contribute technology that may become part of the standard
- If contributed technology becomes mandatory, related patents become "essential"
- Patent owners declare their SEPs and commit to FRAND licensing
FRAND Licensing
FRAND stands for Fair, Reasonable, and Non-Discriminatory. SEP owners must:
- Offer licenses to anyone who wants one
- Charge reasonable rates
- Not discriminate between licensees in similar situations
Why SEPs Matter
- For implementers: You must license SEPs to sell standard-compliant products
- For patent owners: SEPs can be very valuable but come with licensing obligations
- For the industry: SEPs balance innovation incentives with technology access
Challenges with SEPs
- Over-declaration: Many declared SEPs may not actually be essential
- Rate disputes: Disagreements about what FRAND rates should be
- Hold-up/hold-out: Strategic behavior by both licensors and licensees
- Essentiality assessment: Determining if a patent is truly essential is complex